If Interest Rates increase? Affordability, Qualifying for and Home Payments ALL RISE!

The latest numbers regarding California’s “Home Affordability” are un-settling. They tell the story of a market with big price appreciation and increasing interest rates. While our affordability hit just over 10% in California during the BIG PEAK market times of 2006/2007, when the market dropped we shot BACK up OVER 50%. Remember, the HIGHER number in the “Affordability Index” the MORE folks can buy a home. We have dropped DOWN to 36%. It’s going to KEEP going down due to market pressure but if rates tick up it could PLUMMET!

What does the government shutdown mean to the loan process? Otto Kobler of Summit Funding joins us this week for an update.

The short answer is….”it depends on how long this drags on” hourglass

The media is sending mixed messages, as usual. So, we asked Otto to give us some real information….straight from the trenches.

At the beginning of the week there were reports saying, ” FHA-backed mortgages will be halted in a shutdown” Only to later be “updated”  and corrected.

Just to be clear; FHA is not halting.  If you are in the process, or even beginning the process of qualifying for a loan, any loan, DON’T STOP! 

 However, Otto will explain some issues that may arise, if the shutdown continues, and how the underwriters for most types of loans are trying to accommodate. 

The National Association of Realtors (NAR) has released a list of those areas of the shutdown which may effect the real estate market.

http://www.realtor.org/articles/government-shutdown-updates

The NAR notes that most FHA, VA and Conventional Loans will continue to be processed, but possible delays should be anticipated.

  • FHA multi-family property loans that do not have a loan commitment yet, will be problematic.  However, loans will continue to be processed in the FHA single-family loan program.
  • USDA loans will be problematic if the borrower has not received conditional commitment from the Rural Development office
  • Freddie Mac and Fannie Mae and the Federal Housing and Finance Agency will continue to operate normally.
  • The Bureau of Indian Affairs (BIA) has announced that there will be no processing or recording of property transactions on Leased Indian Tribal Land during the government shutdown.
  • Social Security and IRS shutdowns will be where most of the delays and issues come from…depending on just how long this shut-down continues. (one might say…”a ticking time bomb”, unless a work-around is found.)

With that said, Otto will fill us in on the reality of all of this. What is he actually seeing? What is he anticipating?… This is where the REAL information comes from.

otto_kobler_smOtto Kobler

Branch Manager / Sr. Loan Officer

1400 N. Dutton Avenue Suite 5
Santa Rosa, CA 95401
Office: (707) 522-6300
Direct: (707) 522-6300 Ext. 11
Fax: (707) 522-6303
Email: okobler@summitfunding.net
NMLS: 225957
BRE License: 00981742

Otto Kobler

Branch Manager / Sr. Loan Officer

 

Otto Kobler

1400 N. Dutton Avenue Suite 5
Santa Rosa, CA 95401
Office: (707) 522-6300
Direct: (707) 522-6300 Ext. 11
Fax: (707) 522-6303
Email: okobler@summitfunding.net
NMLS: 225957
BRE License: 00981742

– See more at: http://www.summitfunding.net/okobler#sthash.V8xQkPOg.dpuf

Tune us in this, and every, Sunday ~ 9:00-10:00am . 1350AM KSRO ~ Call in; 707-636-1350

Stay Informed; The latest information will continue to be posted to realtor.org/governmentshutdown. Or, email Mike And Allison at; NoDumbQuestion@gmail.com

 

 


 

Why WAITING for 3.5% is FOLLY and Financially Naive.

$$SignsThe link below will take you to a Fannie Mae history of 30 year fixed rate loans. The reason I’m bringing HISTORY into the argument of lower interest rates is to show Buyers and Sellers why NOT to “wait it out”. These folks mistakenly think they will see 3.5% again.  It is wise to  understand the dynamics OF interest rate fluctuations and to study past rate increases. For instance,   In April of 1971 the interest rate was 7.31%–(42 YEARS AGO!) it would NOT fall under that rate again until July of 1993 when it hit 7.21%! Oh, and during that time frame it hit a high of 18.45%  in October of 1981!

30 Year Fixed Rates since 1971. Waiting for 3.5% again? Good luck!

The first 11 years of my real estate career we had double digit interest rates with that big high I mentioned above. We STILL sold homes. Sure they were lower but so were wages and salaries. Fast forward to today and we see rates soaring from April to today by one full percentage point or what they say in banking as 100 “basis” points. And this is WITH the Fed taking a long term support measure for keeping interest rates “low”.  What bothers me is the consumer balking at rates exceeding 5% as if THIS is a high rate! Continue reading Why WAITING for 3.5% is FOLLY and Financially Naive.